Take Your Dream Vacation Without Causing a Retirement Nightmare

September 28, 2022

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Katherine Zacharias

Katherine Zacharias

Financial Professional



Encinitas, CA 92024

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September 28, 2022

Take Your Dream Vacation Without Causing a Retirement Nightmare

Take Your Dream Vacation Without Causing a Retirement Nightmare

Now that the kids are out of the house, maybe you and your spouse want to take that once-in-a-lifetime island-hopping cruise.

Or maybe your friends are planning a super-exciting cross-country road trip to see all the sites you learned about in school. It can be tempting to skim a little off the top of your retirement savings to fund that dream vacation and make it happen. But whatever your vacation dream is, you shouldn’t sacrifice your retirement savings to live it.

This isn’t to say you shouldn’t take that trip. Vacation is important to health and wellbeing. If anything, studies show that Americans aren’t taking enough vacation during the year.

But, for those that do take a break, many are going into debt to do it, sadly enough. A survey by the financial planning platform LearnVest asked 1,000 adults how they finance their vacations. The answer? They go into debt.

The study found: • 21% of Americans have gone into debt for vacation. • Most of those who used debt to fund their vacation incurred $500-$2,999 in new debt.¹

So, what to do if you’re hungry for travel and need a getaway? Here are some simple strategies to help you save for that vacation, all while protecting your funds for retirement.

1) Follow the $5 a day rule: The $5 a day rule simply means you put a fiver away each day toward your vacation. Most of us could probably scrape together $5 a day just by making coffee at home and bringing a sandwich or two to work each week. If you muster up the discipline to stick to it for a year, you’ll end up with $1,825 – a pretty decent vacation fund.

2) Use a rebate app: Rebates can put cash in your pocket. Try an app like Ibotta. Just sign up and select the rebates for items you purchase at the stores you frequent. Shop and scan your receipt. The app will put the rebate into an account. You can withdraw the cash through Paypal or Venmo.

3) Cancel the gym: Working out is critical to staying healthy! But ask yourself if you really need that gym membership. Gym memberships can cost anywhere from $35 to more than $100 a month. Consider saving that money for a vacation and start working out at home.

4) Cut down on your food budget: Of course, you gotta eat. But we could all probably tighten up our food budget a bit. Try meal planning and batch cooking. Plan your meals around what’s on sale and in season.

5) Find free entertainment: Can’t live without getting some weekly entertainment? You don’t have to – just look for the free events going on in your community. Consult your local newspaper or town’s website for info on community festivals, outdoor concerts, and art shows.

Keep Calm and Save On Saving for anything has its challenges. But with a little effort and perseverance, you can have your dream vacation and your retirement, too!

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¹ “Inflation Anxieties and Personal Debt Are Not Stopping One-Third of Americans From Planning Travel in 2022 and 2023,” Yahoo, Sep 20, 2022, https://www.yahoo.com/now/inflation-anxieties-personal-debt-not-130000277.html

September 21, 2022

The Pros and Cons of Budget Cars

The Pros and Cons of Budget Cars

Buying a car can be pricey.

The average used car costs over $33,000,¹ while the average for a new one is around $48,080.² When it comes to transportation (or anything else for that matter), it only makes sense that you’d want to save as much money as possible. But are there times when buying a used or budget car is a better investment than buying a new one? Here are some questions to ask yourself before you make that purchase.

How much mileage can you get out of this car?

One of the big things to consider when researching a budget car is how many miles of prior travel you’re paying for. Buying a cheap (although unreliable) car that breaks down on the regular due to wear and tear may give you fewer miles for your money than paying more for a car that might last 10 years. If you’re committed to buying used, you’ll probably want a mechanic to inspect the car for issues that might affect your car’s lifespan.

How much will maintenance and repairs cost you?

You might be one of the few who know someone with the auto know-how to keep an ancient car running for years. However, the average person will need to have car problems repaired at a professional shop, which can become expensive if it constantly needs work. This can be especially costly if you sink thousands into maintenance only for your vehicle to die for good earlier than expected. It’s worth considering that buying new might save you a huge hassle and potentially give you more miles for your money.

How does the interest rate compare for a new car vs. used?

The uncertainty involved with buying a used or budget car can increase the cost of financing. Lenders will often charge you higher interest for purchasing a used car than they would a new one.³ Having a high credit score will improve your rates, but that extra cost can still add up over time.

What you’re trying to avoid is buying a used piece of junk that requires constant maintenance at a shop, has a higher interest rate, and gives out too soon. There are definitely used and budget cars out there that have great value. Just be sure to do your research before you make such a significant investment!

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¹ “Consumers are shelling out an average $10,000 more for used cars than if prices were ‘normal,’ research shows,” Sarah O’Brien, CNBC, Jul 21 2022, https://www.cnbc.com/2022/07/21/consumers-paying-average-10000-above-normal-prices-for-used-cars.html

² “The Average Price of a New Car Is Creeping Toward $50,000,” Brad Tuttle, Money, Sep 14, 2022, https://money.com/new-car-prices-average-50000/

³ “Why Do Used Cars Have Higher Interest Rates?” Doug Demuro, Autotrader, Oct 13, 2013, https://www.autotrader.com/car-shopping/why-do-used-cars-have-higher-interest-rates-215730

July 25, 2022

Dollar Cost Averaging Explained

Dollar Cost Averaging Explained

Most of us understand the meanings of “dollar” and “cost”, and we know what averages are…

But when you put those three words together – dollar cost averaging – the meaning may not be quite as clear.

Dollar cost averaging refers to the concept of investing on a fixed schedule and with a fixed amount of money. For example, after a careful budget review, you might determine you can afford $200 per month to invest. With dollar cost averaging, you would invest that $200 without regard to what the market is doing, without regard to price, and without regard to news that might impact the market temporarily. You become the investment equivalent of the tortoise from the fable of the tortoise and the hare. You just keep going steadily.

When the market goes up, you buy. When the market goes down, you can buy more.

The gist of dollar cost averaging is that you don’t need to be a stock-picking prodigy to potentially succeed at investing. Over time, as your investment grows, the goal is to profit from all the shares you purchased, both low and high, because your average cost for shares would be below the market price.

Hypothetically, let’s say you invest your first $200 in an index fund that’s trading at $10 per share. You can buy 20 shares. But the next month, the market drops because of some news that said the sky was falling somewhere else in the world. The price of your shares goes down to $9.

You might be thinking that doesn’t seem so great. But pause for a moment. You’re not selling yet because you’re employing dollar cost averaging. Now, with the next month’s $200, you can buy 22 shares. That’s 2 extra shares compared to your earlier buy. Now your average cost for all 42 shares is approximately $9.52. If your index fund reaches $10 again, you’ll be profitable on all those shares. If it reaches $12, or $15, or $20, now we’re talking. To sum up, if your average cost goes up, it means your investment is doing well. If the price dips, you can buy more shares.

Using dollar cost averaging means that you don’t have to know everything (no one does) and that you don’t know for certain what the market will do in the next day, week, or month (no one does). But over the long term, we have faith that the market will go up. Because dollar cost averaging removes the guesswork involved with deciding when to buy, you’re always putting money to work, money that may provide a solid return in time.

You may use dollar cost averaging with funds, ETFs, or individual stocks, but diversified investments are potentially best. An individual stock may go down to zero, while the broad stock market may continue to climb over time.

Dollar cost averaging is an important concept to understand. It may save you time and it may prevent costly investment mistakes. You don’t have to try to be an expert. Once you understand the basics of dollar cost averaging, you may start to feel like an investment genius!

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Market performance is based on many factors and cannot be predicted. This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed financial professional, accountant, and/or tax expert to discuss your options.

June 29, 2022

Sinking Funds 101

Sinking Funds 101

You can put down the life jacket—a sinking fund is actually a good thing!

Why? Because a sinking fund can help you avoid high interest debt when making big purchases. Here’s how…

Put simply, a sinking fund is a savings account that’s dedicated to a specific purchase.

For instance, you could create a sinking fund for buying a new car. Every paycheck, you would automate a deposit into the fund until you had enough money to buy your new ride.

And that can make it a powerful tool. Instead of putting big ticket items on a credit card or using financing, you can instead use cash. It can work wonders for your cash flow and your ability to build wealth over the long haul.

Here are a few tips for making the most of your sinking fund…

Plan in advance

Sinking funds work best when they’ve had time to accumulate—you probably can’t save for two weeks and then expect to buy a car!

First, write a list of all major upcoming expenses on the horizon. List how much you expect them to cost, and when you plan to purchase them.

Then, divide the cost by the number of pay periods between now and then. That’s how much you need to save each paycheck to buy the item in cash. Even if you can’t spare the cash flow to save the full amount, you can at least save enough to lower the amount of debt you’ll be taking on.

Prioritize access

What good is saving for a purchase if you can’t access the money? Not much.

That’s why it’s best if your sinking fund is highly liquid. No penalties for withdrawal. No delay between selling assets and accessing cash. Otherwise, you may find yourself unnecessarily twiddling your thumbs instead of actually making the purchase!

Prioritize safety

Remember—this is for a specific purchase on a relatively short timetable, so you might not want to put these funds in a more aggressive account. The last thing anyone wants is for their car savings to get halved by a bear market. There are other accounts specifically designed for building wealth. This doesn’t need to be one.

So before you make your next big purchase, call up your licensed and qualified financial professional. Give them the details about what you plan to buy and when. Then, collaborate to see what saving for the purchase could look like. It could be the alternative to credit card spending and financing that your wallet needs!

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Any examples used in this article are hypothetical. Market performance is based on many factors and cannot be predicted. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

April 25, 2022

Lessons From the Super Frugal

Lessons From the Super Frugal

The world of the super frugal can be an overwhelming place.

In a sense, it’s inspiring. The creativity and grit of the super frugal are sure to put a grin on your face. You may even find a few fun money saving projects that are worth your time. Saving money with french toast? Sign me up!

However, there’s a fine line between inspiring and weird, and the super frugal sometimes cross that line. Could reusing a plastic lid as a paint palette save you money? Sure! The same is true for bartering with store clerks. Will you get funny looks? Almost certainly.

It’s not that funny looks are bad. There’s wisdom to defying the crowd and marching to the beat of your own drum. But sometimes there’s a good reason to raise an eyebrow at super frugality…

That’s because it can miss the point.

Your financial top priority must always be providing for those you love. In this day and age, that means building wealth.

Some people may need extreme measures to do that. Let’s say you have deep credit card debt or a spending problem. Coupon clipping, saving on utilities, and thrifting may help you knock that debt out faster and free up the cash flow you need to start building wealth.

But don’t mistake the means for the end. Obsessing over coupons, stressing over recycling, and cutting too many corners can reach unhealthy and even pathological extremes. That doesn’t create wealth and prosperity—it can just cause more suffering.

So take lessons from the super frugal. Find a few money savings projects that you enjoy. Maybe do a spending cleanse. But keep your eye on the ultimate prize—building wealth for you and your family.

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April 20, 2022

Are You Ready?

Are You Ready?

It’s not a question if buying is better than renting. It’s a question of when you’ll be ready to buy.

That’s because rent money is lost to your landlord forever.

A homeowner, though, has the chance for the value of their house to increase. It may not be an earth-shattering return, but there’s a far higher chance that you’ll at least break even from owning than renting.

Even with its advantages, owning a home isn’t for everyone… at least, not yet. Here are a few criteria to consider before becoming a homeowner.

You’re ready to put down roots. If you’re not yet prepared to live in one place for at least five years, home ownership may not be for you.

Why? Because buying and selling a home comes with costs. As a rule of thumb, waiting five years can allow your home to appreciate enough value to offset those expenses.

So before you buy a home, be sure that you’ve done your homework. Will your job require you to change locations in the next five years? Will local schools stay up to par as your family grows? If you’re confident that you’ll stay put for the next five years or more, go ahead and start planning.

You can cover the upfront costs of home ownership. The upfront costs of buying a home, as mentioned above, are no laughing matter. They may prove a barrier to entry if you haven’t been saving up.

The greatest upfront costs you’ll face are the down payment and closing costs. A down payment is usually a percentage of the total purchase price of your home—for instance, a home priced at $200,000 might require a 20% down payment, or $40,000.

Closing costs vary from state to state, with averages ranging from $1,909 in Indianna to $25,800 in the District of Columbia.¹ These include fees to the lender and property transfer taxes.

The takeaway? Start saving to cover the upfront costs of purchasing a home well in advance. Your bank account will thank you!

You can handle the maintenance costs of home ownership. Say what you will about landlords, but at least they don’t charge you for home repairs and maintenance!

That all changes when you become a homeowner. Every little ding, scratch, and flooded basement are your responsibility to cover. It all adds up to over $2,000 per year, though that figure will vary depending on the size and age of your home.² If you haven’t factored in those expenses, your cash flow—as well as your airflow—might be in for trouble!

Do you have residual debt to deal with? The great danger of debt is that it destabilizes your finances. It dries up precious cash flow needed to cover emergency expenses and build wealth.

That’s why throwing a mortgage on top of a high student loan or credit card debt burden can be a blunder. You might be able to cover costs on paper, but you risk stretching your cash flow to take care of any unplanned emergencies.

In conclusion, owning a home is an admirable goal. But it may not be for you and your family yet! Take a long look at your finances and life-stage before making a purchase that could become a source of stress instead of stability.

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¹ “Average Closing Costs in 2020: What Will You Pay?” Amy Fontinelle, The Ascent, Sept 28, 2020, https://www.fool.com/the-ascent/research/average-closing-costs/

² “How Much Should You Budget for Home Maintenance?” American Family Insurance, https://www.amfam.com/resources/articles/at-home/average-home-maintenance-costs

March 7, 2022

Questions to Ask Before Buying a Home

Questions to Ask Before Buying a Home

Buying a home is one of the largest investments many people will ever make.

It’s also among the most complicated and time-consuming transactions. So before you sign on the dotted line, it’s best to ask yourself these key questions:

What are my needs for space?

How much can I afford to spend each month on my mortgage, utilities, and repairs?

Are there pre-existing problems with this property?

How is the neighborhood? Is it safe? Are the schools good? What kind of amenities are nearby (i.e., grocery stores, restaurants, sports)?

How much will I need for closing costs and my down payment?

What’s my strategy for a bidding war?

What are my needs for space? When you’re buying a home, it’s important to take stock of your needs for space. Do you need a lot of bedrooms for a growing family? A large backyard for barbecues and birthday parties? Or would you be happy with a more modest property that will save on monthly mortgage payments?

Planning ahead will help you stay within your budget and find the right property for your needs. Take time to sort through the options and be vigilant to rule out homes that may seem appealing at first glance, but might not truly serve your family.

If you’re unsure about what you need in a home, consult with a real estate agent who can help figure out the amenities that are best suited for you.

How much can I afford to spend each month? It’s important to be realistic about how much you can afford to spend each month on your mortgage. A good rule of thumb is that your mortgage payment should not be more than 30% of your monthly income. And remember—just because you’re pre-approved for a certain amount, that doesn’t mean it’s what you can actually afford to spend.

It’s also a good idea to have a budget for other costs associated with homeownership, such as property taxes, homeowner’s insurance, utilities, maintenance, and repairs. It’s impossible to fully estimate these costs in advance. But by planning ahead, you can get an idea of your potential monthly expenses and weigh them against your income.

Are there pre-existing problems with this property? It’s critical to be aware of any potential problems. This includes checking for any major repairs that may need to be done, as well as researching the surrounding neighborhood. Is this house in a flood plain? How is the foundation? When was the last time the roof was replaced?

It’s a good idea to have a home inspection done before making an offer on a property. This will help you get a better idea of the condition of the property and what repairs need to be made.

If you’re not comfortable with the condition of the property—no matter how beautiful or spacious the house is—it’s best to walk away and find a property that’s a better fit overall.

How is the neighborhood? Is it safe? Are the schools good? What kind of amenities are nearby? When you’re buying a home, it’s important to take into account the surrounding neighborhood. This includes researching crime rates, checking out traffic patterns, inquiring about the schools, and seeing how close you are to stores or activities that are important to you.

If you have children, it’s critical to research the schools in the area. You’ll want to make sure that there is a high-quality education available. You’ll also want to be aware of any negative reviews about the schools in the area.

How much will I need for closing costs and my down payment? There are a number of costs that you’ll need to budget for. This includes the down payment, closing costs, and moving expenses.

The downpayment is the amount of money that you pay upfront when you buy a home. It’s usually between 5% and 20% of the purchase price. So if you’re buying a $400,000 home, you’ll need to pay between $20,000 and $80,000 upfront.

Closing costs are the fees that are charged by the bank and the government when you buy a home. These costs can range from 2% to 5% of the purchase price. So in the example above, you would be paying between $8,000 and $20,000 in closing costs.

Moving expenses can range from $500 to $5,000, depending on how much stuff you have and how far you’re moving.

It’s important to budget for these costs ahead of time so that you’re not surprised when you sign the paperwork and are handed the keys.

What’s my strategy for a bidding war? It’s a problem that’s caught many off guard in the current housing market. That’s why it’s important to have a strategy in place. This includes knowing how much you’re willing to spend and being prepared to make a higher offer than the other buyers.

It’s also important to have your finances in order. This means that you should be pre-approved for a mortgage and have enough money saved up for your down payment.

If you’re not comfortable with the idea of a bidding war, it’s best to walk away and find a property that’s a lower price.

Buying a home is never an easy decision. That’s why these questions should all be considered ahead of time—preferably with your realtor—so they don’t catch you by surprise when buying a house! What other factors can you think of? Let us know what future homeowners might want to consider when purchasing a new home.

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March 2, 2022

Playing With F.I.R.E.

Playing With F.I.R.E.

Financial Independence. Retire Early. Sounds too good to be true, right?

But for many, it’s the dream. And for some, it’s even become a reality.

What is the Financial Independence Retire Early, or “F.I.R.E.” movement? It might be obvious, but it’s a movement of people who are striving to achieve financial independence so that they can retire early. How early? That’s up to each individual, but typically people in the F.I.R.E. movement are looking to retire between their 30s and 50s.

How are they doing it? By saving as much money as possible and living a frugal lifestyle. That might mean driving a used car, living in a modest house, and cooking at home instead of eating out. They scrimp and save wherever they can to save.

So why is the F.I.R.E. movement gaining in popularity? There are a few reasons…

Some people want freedom. They want the freedom to travel, to spend time with their family, and to do whatever they want without having to worry about money.

Others are tired of the rat race. They’re tired of working jobs they don’t love just so they can make money to pay for things they don’t really want. They’d rather be doing something they enjoy and have more control over their own lives.

And finally, people want security. They want the wealth they need to live comfortably and fear-free, and they want it now. They don’t want to wait until they’re 65 or 70 to start enjoying their retirement.

It’s a challenging path. Achieving financial independence and retiring early takes hard work, sacrifice, and planning. You’ll have to face financial challenges like covering health insurance, for one.

So if you’re thinking about joining the F.I.R.E. movement, what are some of the first steps?

1. Assess your finances. Figure out how much money you need to live on each month and how much you need to save to achieve financial independence.

2. Set financial goals. Determine where you want to be financially and create a plan to get there.

3. Make a budget and stick to it. Track your spending and make adjustments as needed so you can save more money.

4. Invest in yourself. Education is key, so invest in books, courses, and other resources that will help you build your wealth.

5. Stay motivated. Follow other F.I.R.E. enthusiasts online, read blogs and articles, and attend meetups to keep yourself inspired on your journey to financial independence.

So are you ready to play with F.I.R.E.?

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February 23, 2022

Is Saving Money on Utilities Worth the Effort?

Is Saving Money on Utilities Worth the Effort?

Penny pinchers and smart savers have developed dozens, perhaps hundreds, of ways to save money on their utility bills.

Have you heard of any of these…?

Putting rocks in the toilet tank to save money on water. Cranking down the thermostat in winter and cranking it up in the summer to save on power. Manically unplugging every appliance that’s not in use.

Maybe you knew a family growing up that used all these strategies to make ends meet. Or maybe it was your family!

But is it really a good idea to cut back on utilities?

If you’re backed into a financial corner or new to saving, it’s not a bad place to start. But if you’re working toward financial independence, you likely have greater obstacles to overcome.

Here’s a breakdown of the average American’s annual consumer spending…

Housing: $21,409

Transportation: $9,826

Food: $7,316

Personal insurance and pensions: $7,246

Healthcare: $5,177

Entertainment: $2,912

Cash Contributions: $2,283

Apparel and Services: $1,434

That’s a lot of money flying out the door each year!

Where do utilities fit into the picture? According to Nationwide, families spend an average of $2,060 on utilities each year.

That puts it towards the bottom of the average American’s budget.

Cutting your spending on housing, transportation, or food by one-third would free up more cash flow than reducing your utilities by half.

So before you invest in some space heaters or start lugging rocks into your bathroom, evaluate your overall spending. Are there problem areas where cutting back would create greater results?

If you answer yes, focus your time and attention first on those categories. Find a cheaper apartment or recruit roommates. Carpool with friends. Dine out less.

But if you’ve already budgeted and you still need more cash flow, turning off some lights and using an extra blanket or two at night won’t hurt.

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¹ “How much is the average household utility bill?” Nationwide, https://www.nationwide.com/lc/resources/personal-finance/articles/average-cost-of-utilities

² “Average annual expenditures of all consumer units in the United States in 2020, by type,” Statistia, Dec 9, 2021 https://www.statista.com/statistics/247407/average-annual-consumer-spending-in-the-us-by-type/#:~:text=This%20statistic%20shows%20the%20average,amounted%20to%2061%2C334%20U.S.%20dollars.

February 16, 2022

Manage Your Finances Like a Pro

Manage Your Finances Like a Pro

Do you ever feel like your money is going out the door as fast as it’s coming in?

Maybe you’ve tried budgeting, only to slip back into a pattern of unconscious spending.

Or maybe you’ve tried saving, but found that you simply don’t have enough cash at the end of each month.

If you’ve tried to get your finances in order but still struggle to stay afloat, this may be the article for you. Here are three dead simple things you can do right now to help you manage your money like a pro.

1. Download a budgeting app.

If you’re not a spreadsheet whiz, don’t worry. There are many free budgeting apps available that can help you keep your finances in order without breaking a sweat. Most of these apps make it easy to add transactions and set goals based on your income and expenses.

Best of all, some even sync with your bank account, so you don’t have to tally up your spending each month—the app does it for you!

Here are a few budgeting apps to consider…

Mint—Good overall budgeting app that syncs with your bank accounts

YNAB (You Need a Budget)—In-depth budgeting tool that’s more hands-on than other options

Mvelopes—Cash envelope budgeting system that syncs with your bank accounts

EveryDollar—Simple budget that requires manual input of expenses

Honeydue—Budgeting app designed specifically for couples

Each of these apps is free to use, but offer additional features for a monthly or annual fee.

2. Dial back subscriptions.

Do you have a gym membership, magazine subscriptions, or streaming services?

Better question—are you using your gym membership, magazine subscriptions, or streaming services?

If you’re like many, you’re shelling out money each month for subscriptions you don’t even use. You may have even forgotten that you’re still signed up for some of them!

But little by little, those subscriptions add up, depleting your cash flow each month.

So take some time to look at your transaction history to discover recurring charges. Then, cancel the ones you’re not using.

Pro-tip: You can also use apps like Truebill and Hiatus to help identify and cancel unwanted subscriptions.

3. Automate your savings.

Do you struggle to save money because of your spending habits? If so, it may be difficult to set aside cash while still having immediate access to it.

The good news is that you can set up an automatic transfer from your checking account to a savings account each month.

In fact, with this method, you don’t even have to think about it! It’s like paying a monthly subscription to a future of potential wealth and financial independence.

And it’s not difficult. Simply log in to your savings or retirement account and look for a transactions or transfers tab. Then, schedule a recurring deposit right after you get each paycheck. Just like that, you’ll automate a wealth building process that requires zero effort on your part.

If you want to manage your money like a pro, simply follow these three easy steps. With these simple moves in place, you’ll be watching your savings grow possibly faster than ever before!

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January 19, 2022

How To Maximize Savings With A Limited Income

How To Maximize Savings With A Limited Income

It can be tough to save money when your income is tight.

But it’s not impossible. In fact, there are a lot of things you can do to make the most of your money and stretch your dollars further. Here are some tips to help you get started:

1. Track your spending. The best way to save money is to know exactly how much you’re spending and where you’re spending it.

Create a budget and track all of your expenses for a month or two so that you can see what areas are costing you the most money. Then, work on those categories first.

If there are some areas that you’re having trouble cutting back, try using a website like Mint.com to see if there’s a way to reduce spending in those categories. Maybe it makes sense for you to switch your cell phone plan or cancel the cable package. The key is to be aware of where your money is going.

2. Make your own meals. Eating out every day is a quick way to blow through your paycheck. Creating your own meals is almost always cheaper than buying prepared food.

Plus, by making more of your own food, you’ll have more control over what ingredients are going into it—which means you can make healthier food choices.

3. Use coupons and rebates to save money. If you redeem the right coupons, you can get a lot of free or discounted products and services.

Keep an eye out for coupons in your mailbox, in newspapers and magazines, and through online coupon sites like Coupons.com. You can also take advantage of rebates, which give you a discount on your purchase price after the product has been purchased.

4. Ask for discounts. If you’re buying something from a business, be sure to ask if they offer any kind of discount. Many times retail stores and restaurants will offer discounted items or free upgrades to customers who ask.

5. Get creative with your transportation costs. No, that doesn’t mean getting rid of your car. But there are things you can do to make transportation cheaper. For example…

Take public transportation when possible (it’s usually less expensive than buying gas and parking).

Carpool with other people who live in your area or work in your area.

Maintain your car to help avoid expensive repairs down the road.

Getting from point A to point B will always cost time and resources. But with these tips, it doesn’t have to make or break your budget.

6. Buy used items. Not only is it possible to find good used items at discount prices, but buying “recycled” gives an item a second life and keeps it from being thrown into a landfill. You can buy used items locally or on sites like Craigslist and eBay, and you can also try searching a local thrift store. You might be surprised by what other people consider junk!

7. Find the best prices online. Retailers know that shoppers love searching for the lowest price. Many of them will actually reduce their prices if you show them that someone else is selling an identical item for less.

Use a price comparison website like PriceGrabber to look up the items you want to buy, and then compare the prices of those products across multiple retailers.

Saving money on a tight budget is possible if you’re willing to get creative and look for ways to reduce your spending. By taking advantage of discounts, coupons, and rebates, by making your own meals instead of eating out, and by looking for the best online prices, you can stretch your dollars further.

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January 10, 2022

Why Poverty Can Be Outrageously Expensive

Why Poverty Can Be Outrageously Expensive

Picture the most expensive lifestyle you can imagine. What do you see?

Palm trees and beach views? Italian shoes and Swiss watches? Flying yourself into space just because you can?

How about having to live in government housing, or working a minimum wage job, or not even being able to find a job?

It’s counterintuitive, but poverty can be outrageously expensive.

There are two main reasons…

  1. Poverty makes essential spending relatively pricey
  2. Poverty has hidden—and costly—side effects

Let’s break these down…

Poverty makes essential spending relatively pricey. Consider an example. Let’s say you’re single and earn $10,000 per year, $2,000 beneath the federal poverty line.¹

Let’s also say that you and some buddies snag a mediocre apartment in the city. Great location, right? But at $500 each per month, it’s $6,000 each per year. That’s over half your income on housing alone.

Your car? Between insurance, gas, and repairs, you’re looking at costs that could be north of $5,000.

That leaves you in the hole for $1,000. Then add groceries, your cell phone, and emergencies. Normal living expenses have not only consumed 100% of your budget, but they’ve left you in the red for other essentials.

For the wealthy, those items aren’t even a consideration. The essentials take up just a fraction of their income. What’s relatively cheap for them becomes crushingly expensive for you.

But the cost of poverty can get steeper…

Poverty has hidden—and costly—side effects. Suppose that, to save money, you downgrade your housing. You find a true hovel in a bad part of town that charges $150 each per month, or $1,800 each annually.

And it doesn’t take long for reality to set in.

You might find yourself in a so-called food desert since there aren’t proper grocery stores around you that sell healthy, affordable food. The quality of your diet plummets, but still increases in cost.

There’s consistent crime in your neighborhood. Possessions get stolen. Cars get broken into. Friends get hurt. You’re under constant stress.

To deal with the stress, you pick up some foolish habits that further hurt your finances and health.

You turn to payday lenders to make ends meet. It’s a critical mistake—they charge you aggressive interest rates that become a black hole of debt.

Finally, the consequences of a low-quality diet, stress, and unhealthy coping mechanisms emerge. You face one expensive health crisis after another. You have to quit your job as your condition worsens.

This isn’t to excuse bad or foolish or unhealthy behavior. Rather, it shows how situations make people vulnerable to otherwise avoidable pitfalls.

Relative expenses and hidden expenses creating a vicious cycle help explain why it’s so hard to escape poverty. It also helps explain why poverty tends to be intergenerational. Poverty actually consumes the resources needed to build wealth.

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¹ “Poverty Guidelines,” Office of the Assistant Secretary for Planning and Evalutation, Jan 13, 2021, https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines

² “Average monthly apartment rent in the United States from January 2017 to February 2021, by apartment size,” Statistia, Mar 25, 2021, https://www.statista.com/statistics/1063502/average-monthly-apartment-rent-usa/

³ “Average Car Insurance Costs in 2021,” Kayda Norman, Nerdwallet, Aug 20, 2021, https://www.nerdwallet.com/article/insurance/how-much-is-car-insurance

January 3, 2022

Addictive Budgeting

Addictive Budgeting

There’s no better way to feel like a mature adult than budgeting.

The planning, the structure, and the routine of proper budgeting create a sense that you’ve got this. You’re in control. You’re a proper grownup.

But there’s another feeling that budgeting can conjure—the dreaded “bleh”!

That’s because budgeting seems like a ton of work. You have to set goals, track your income, record every time you spend money, create a spreadsheet, download an app, be consistent—doesn’t sound like much fun.

And there’s that nagging question—what if I blow it? What if I overspend? What if an emergency pops up and I can’t cover it? What does that say about me and my character?

It’s understandable—intentionally starting a healthy habit requires focus and work, but it also opens the possibility of failure.

Fortunately, there’s a two-step hack to get you addicted to budgeting in the New Year…

Step 1: Track spending

Step 2: Relentlessly reward good behavior

Why does this method work? Because it leverages two things that your brain loves—progress and rewards.

Step 1: Next time you go shopping, make note of how much you spend. Use a budgeting app on your phone. (It helps remove mental barriers from the tracking process.)

Then, challenge yourself to spend slightly less next time. Track the results.

Before long, you’ll begin compulsively tracking—and reducing—your spending. Why? Because you’re seeing progress. You feel like you’re moving in the right direction. And that feels incredible.

Step 2: But you can further intensify your budgeting habit. Don’t just track your progress—celebrate it!

When you make a dent in your spending, reward yourself. Indulge in something you love. Grab dinner with a close friend. Or simply pick up a candy bar on your next shopping trip. Whatever it is, give yourself a high-five!

At first, this will feel like a rush. You’re allowing yourself to celebrate a victory, and that recognition is elating.

But over time, it will become routine. You’ll automatically start doing the right thing because your brain expects a reward. You’re proactively reinforcing healthy behavior, creating a powerful habit.

So to recap, this is how you should budget in the new year…

Track spending

Relentlessly reward good behavior

Try it out for a week and see how you feel. If you feel good about it, keep it up! If you don’t stick with it, that’s okay. Failure is part of the process. The key is to keep retooling your approach until the habit sticks.

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December 28, 2021

The Right Way to Spend

The Right Way to Spend

There’s endless advice about how not to spend money. And it’s often delivered with an undertone of shame.

“You’re spending WHAT on your one bedroom apartment? Why don’t you find roommates?”

“I’ll bet those lattes add up! That money could be going towards your retirement.”

“You still buy food? Dumpster diving is so much more thrifty!”

You get the picture.

But make no mistake—pruning back your budget is great IF overspending is stopping you from reaching your goals.

But what if you’re financially on target? What if your debt is gone, your family’s protected, your retirement accounts are compounding, your emergency fund is stocked, and you still have money to spare?

Good news—you don’t have to live like a broke college student. That’s not you anymore. Instead, you can spend money on the things you really care about, like…

• People you love

• Causes that inspire you

• Local businesses

• House cleaning services

• Travelling

• Building your dream house

• New skills and hobbies

This isn’t a call to wildly spend on everything that catches your momentary fancy. That might be symptomatic of underlying wounds that you’re trying to heal with money. It won’t work.

Instead, it’s a call to identify a few things that you’re truly passionate about. Ramit Sethi of I Will Teach You to Be Rich fame calls these Money Dials.¹ They’re things like convenience, travel, and self-improvement that excite you.

Just imagine you have limitless money. What would be the first thing you spend it on? That’s your money dial.

And, so long as you’re financially stable, there’s no shame in spending money on those things. This is why you’ve worked so hard and saved so much—to provide yourself and your loved ones with a better quality of life. Give yourself permission to enjoy that!

So what are you waiting for? Start planning that backpacking adventure through Scandinavia, or drafting blueprints for your dream house, or decking out the spare room as a recording studio. You’ve earned it!

Not positioned to spend on your passions yet? That’s okay! For now, let your goals inspire you to take the first steps towards creating financial independence and the lifestyle that can follow.

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¹ “Money Dials: The Reason You Spend the Way You Do According to Ramit Sethi,” Ramit Sethi, I Will Teach You To Be Rich, Oct 22, 2021 https://www.iwillteachyoutoberich.com/blog/money-dials/

December 6, 2021

Understanding the Supply Chain Meltdown

Understanding the Supply Chain Meltdown

Have you noticed that store shelves are looking a little… picked over?

Everything from food to toys to computer chips are in short supply and high demand. And it’s straining economies—and consumers—the world over.

The cause? The Pandemic (big surprise).

The results? Empty shelves and skyrocketing prices.

Here’s what happened. The COVID-19 pandemic and shutdowns torpedoed both supply AND demand. Factories couldn’t produce due to COVID restrictions, and consumers weren’t going out and shopping.

As lockdowns ended, people resumed their shopping, increasing demand. But manufacturers have struggled to regain their footing.

They face basic logistical problems like a lack of shipping containers.

Even more problematic, the entire supply chain is short-staffed. Docks don’t have enough workers to move goods off ships. But it wouldn’t make a difference if they did—there aren’t enough truckers to transport goods from docks to stores!

All of those issues result in empty shelves and higher prices as consumers scramble to snatch up what little is available.

So how can you minimize the impact of the supply chain meltdown on your wallet? Here are three strategies…

Start holiday shopping ASAP. Gift buying season is here. And with the supply chain in chaos, holiday shopping will only grow more expensive. Get gifts sooner rather than later.

Adjust your budget. That means shifting spending power away from experiences, restaurants, and new gadgets—and towards living expenses.

Increase your income. If shifting your budget isn’t enough, it may be time to boost your income. Seek out new opportunities like a new job or a side hustle to help give your cash flow a bump.

And remember—these supply problems may linger. The global supply chain is a complex beast, and it won’t resolve its issues overnight.

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November 29, 2021

3 Reasons to be the Financial Early Bird

3 Reasons to be the Financial Early Bird

Extra-large-blonde-roast-with-a-double-shot-of-espresso, anyone?

As the old saying goes, “The early bird catches the worm.” But not everyone is an early riser, and getting up earlier than usual can throw off a night owl’s whole day.

When it comes to building retirement wealth, however, it’s best to imitate the early worm. So grab a cup of joe—here are 3 big advantages to starting your retirement savings early:

1. Less to put away each month

Let’s say you’re 40 years old with little to no savings for retirement, but you’d like to have $1,000,000 when you retire at age 65. Twenty-five years may seem like plenty of time to achieve this goal, so how much would you need to put away each month to make that happen?

If you were stuffing money into your mattress (i.e., saving with no interest rate or rate of return), you would need to cram at least $3,333.33 in between the layers of memory foam every month. How about if you waited until you were 50 to start? Then you’d need to tuck no less than $5,555.55 around the coils. Every. Single. Month.

A savings plan that’s aggressive is simply not feasible for a majority of North Americans. Over half of Americans are just getting by, living paycheck-to-paycheck.¹ So it makes sense that the earlier you start saving for retirement, the less you’ll need to put away each month. And the less you need to put away each month, the less stress will be put on your monthly budget – and the higher your potential to have a well-funded retirement when the time comes.

But what if you could start saving earlier and apply an interest rate? This is where the second advantage comes in…

2. Power of compounding

The earlier you start saving for retirement, the longer amount of time your money has to grow and build on itself. A useful shortcut to figuring out how long it would take your money to double is the Rule of 72.

Never heard of it? Here’s how it works: Take the number 72 and divide it by your annual interest rate. The answer is approximately how many years it will take for money in an account to double.

For example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this:

72 ÷ 4 = 18

That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact).

Using this formula reveals that the higher the interest rate, the less time it’s going to take your money to double, so be on the lookout for the highest interest rate you can find!

Getting a higher interest rate and combining it with the third advantage below? You’d be on a roll…

3. Lower life insurance premiums

A well-tailored life insurance policy may help protect retirement savings. This is particularly important if you’re outlived by your spouse as he or she approaches their retirement years.

End-of-life costs can deal a serious blow to retirement savings. If you don’t have a strategy in place to help cover funeral expenses and the loss of income, the money your spouse might need may have to come out of your retirement savings.

One reason many people don’t consider life insurance as a method of protecting their retirement is that they think a policy would cost too much.

How much do you think a $500,000 term life insurance policy would cost for a healthy 30-year-old?

$33 per month.² That’s a cost that would easily fit into most budgets!

You may still need a little caffeine for the extra kick to get an early start on powering up your brain (or your retirement savings), but sacrificing a few brand-name cups of coffee per month could finance a well-tailored life insurance policy that has the potential to protect your retirement savings.

Contact me today, and together we can work on your financial strategy for retirement, including what kind of life insurance policy would best fit you and your needs. As for your journey to the brain-boosting benefits of being bilingual – just like with retirement, it’s never too late to start. And I’ll be here to cheer you on every step of the way!

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¹ “Nearly 40 Percent of Americans with Annual Incomes over $100,000 Live Paycheck-to-Paycheck,” PR Newswire, Jun 15, 2021, https://www.prnewswire.com/news-releases/nearly-40-percent-of-americans-with-annual-incomes-over-100-000-live-paycheck-to-paycheck-301312281.html

² “Average Cost of Life Insurance (2021): Rates by Age, Term and Policy Size,” Sterling Price, ValuePenguin, Nov 19, 2021, https://www.valuepenguin.com/average-cost-life-insurance

November 3, 2021

Should You Buy a Budget Car?

Should You Buy a Budget Car?

Buying a car can be pricey.

The average used car costs about $25,410, while the average for a new one is around $45,031.¹ ² When it comes to transportation (or anything else for that matter), it only makes sense that you’d want to save as much money as possible. But are there times when buying a used or budget car is a better investment than buying a new one? Here are some questions to ask yourself before you make that purchase.

How much mileage can you get out of this car? One of the big things to consider when researching a budget car is how many miles of prior travel you’re paying for. Buying a cheap (although unreliable) car that breaks down on the regular due to wear and tear may give you fewer miles for your money than paying more for a car that might last 10 years. If you’re committed to buying used, you’ll probably want a mechanic to inspect the car for issues that might affect your car’s lifespan.

How much will maintenance and repairs cost you? You might be one of the few who know someone with the auto know-how to keep an ancient car running for years. However, the average person will need to have car problems repaired at a professional shop, which can become expensive if it constantly needs work. This can be especially costly if you sink thousands into maintenance only for your vehicle to die for good earlier than expected. It’s worth considering that buying new might save you a huge hassle and potentially give you more miles for your money.

How does the interest rate compare for a new car vs. used? The uncertainty involved with buying a used or budget car can increase the cost of financing. Lenders will often charge you higher interest for purchasing a used car than they would a new one.³ Having a high credit score will improve your rates, but that extra cost can still add up over time.

What you’re trying to avoid is buying a used piece of junk that requires constant maintenance at a shop, has a higher interest rate, and gives out too soon. There are definitely used and budget cars out there that have great value. Just be sure to do your research before you make such a significant investment!

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¹ “The high prices of used cars may finally be dropping: Sonic Automotive president,” Ian Thomas, CNBC, Aug 1 2021 https://www.cnbc.com/2021/08/01/used-car-high-prices-may-finally-be-dropping.html

² “The average new car costs $45,000: What the heck is going on?” Sean Szymkowski, CNET, Oct 13, 2021, https://www.cnet.com/roadshow/news/average-new-car-costs-price-increase/

³ “Why Are Interest Rates Higher on a Loan for a Used Car?” Bethany Hickey, CarsDirect, Jul 29, 2020, https://www.carsdirect.com/auto-loans/why-are-interest-rates-higher-on-a-loan-for-a-used-car

September 8, 2021

About To Splurge? Sleep On It

About To Splurge? Sleep On It

Splurging is awesome. At least, it feels awesome.

Shopping unleashes dopamine, the brain chemical that fuels our biological reward system. Dopamine is the reason you crave food, sugar, affection… and splurging.¹

Think about the last time you splurged. Remember the feeling of anticipation when you walked into the store or pulled up the website? That’s the dopamine pushing you towards buying.

It’s also responsible for the rush when you open the box when you get home or try on that knockout dress for the first time.

There’s nothing wrong with indulging those feelings from time to time. But what can you do if you’re craving a shopping spree that your budget can’t handle?

Simple. Sleep on it!

Waiting 24 hours between feeling the urge to spend and going to the store gives you space to think. Do you really need that new gadget? Will that fancy dress make you happy?

After thinking it over, you may still want to splurge. That’s fine (as long as it’s within your financial strategy)! The key is that when you give yourself time to think things over, you won’t be as likely to make an impulse buy. Instead, you’re more likely to make a calculated, well-reasoned decision. And delaying your gratification will make it all the more rewarding when you walk out of the store.

Keep a close eye on your splurging habits. If you feel like your spending is out of control, you may need to seek a mental health or financial professional. There might be more to your shopping habits than meets the eye!

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¹ “Why Retail “Therapy” Makes You Feel Happier,” Cleveland Clinic Jan 21, 2021, https://health.clevelandclinic.org/retail-therapy-shopping-compulsion/

August 2, 2021

5 Warning Signs That You Need a Financial Professional

5 Warning Signs That You Need a Financial Professional

With the cost of living on the rise, many people are struggling to make ends meet.

It’s important to know when you’re in over your head and need some help from a professional. Here are five warning signs that could indicate it’s time for some financial advice.

You’re not sure if you can afford to retire. The first warning sign that you may need financial advice is when you’re not sure if you can afford to retire when you want to. Retirement is the centerpiece of many financial strategies, so if you feel like you’re short here, it’s a serious red flag.

A financial professional can help you…

  • Determine how much wealth you’ll need to retire comfortably
  • Create a plan that can help you reach your goal

So if there’s any uncertainty about your financial future, schedule a meeting ASAP!

You have a lot of credit card debt and don’t know how to pay it off. When credit card balances start piling up, it can quickly become overwhelming. If left unchecked, your credit card debt can drain your cash flow and slow your progress towards financial goals. A financial professional can help you figure out a strategy to attack debt to help mitigate damage to your finances and avoid potentially lowering your credit score.

You struggle to afford necessities. Sometimes, life throws us curveballs and our budget gets stretched to the max. If you’re struggling to pay rent or put food on the table, it’s time to consider getting some help. Most people are at their best when they’re working towards goals. That’s exactly what a financial professional is here to offer—guidance so you can be the best version of yourself and accomplish your dreams.

You’ve been living paycheck-to-paycheck. If you have a lot of expenses but no savings, it’s likely that your financial strategy is lacking one or more key components. That’s because living paycheck-to-paycheck hampers your ability to build wealth—all of your cash is going straight from your wallet into someone else’s pocket. A financial professional can help you discover areas to dial back your spending and start saving.

You feel like your savings are shrinking, not growing. Have you started to rely on your retirement savings, today? If so, contact a financial professional immediately. They can help you discover the roots of your financial condition and put a financial strategy in place to help protect your nest egg for the future.

It’s important that you know when you need help. These five warning signs could indicate your financial situation is in dire straits and requires professional help. If any one of these apply to you or if you’re just not sure if they do, contact me today!

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July 19, 2021

Top 6 Tips for Cheaper Travel

Top 6 Tips for Cheaper Travel

It seems like there is light at the end of the tunnel for travelers who are itching to see the world.

And with travel restrictions seeming to be on the edge of lifting, they may have the opportunity to explore again.

But before you start planning your international adventures, here are 6 tips for cheaper travel.

1. Avoid expensive tourist spots. Paris is lovely this time of year. So are London, Dubai, and Tokyo. They’re also outrageously expensive to stay, eat, and play in. Fortunately, there are many other locations that are just as loaded with culture and fun things to do at a fraction of the cost. Central and South America, Southeast Asia, and Eastern Europe all feature affordable cities, lovely landscapes, and interesting attractions that go toe-to-toe with classic destinations.

2. Book flights well in advance. Usually the further out you can book, the better. Though some flight sites offer deals on last-minute fares, they’re not always that great of a bargain. It’s typically cheaper to buy tickets a few months in advance. The same logic works for lodging. Speaking of which…

3. Consider staying in a hostel. They’re a great opportunity to meet fellow travelers in a foreign land. They’re often cheaper than an Airbnb or a hotel, and sometimes offer tours. Just do your research in advance—not all hostels are equal as far as cleanliness and safety.

4. Cut transportation costs. Need to travel from city to city? Try taking the bus. It’s not glamorous, but it might be a more cost effective way to get around. While you’re in town, try walking as much as possible and getting public transit when needed. Save your money and spend it on something else like souvenirs or trying a meal you’ve never had before.

5. Explore opportunities to work and travel. You may be surprised by how many programs pay you to visit exciting new places. Whether you’re teaching English in Asia and South America or working as a tour guide in Sweden, opportunities abound. You may earn enough to offset some of your traveling expenses.

6. Eat local, prep at home. Eating out for breakfast, lunch, and dinner in a tourist destination is a surefire way to quickly deplete your travel budget. Instead, explore local markets to purchase ingredients that you can store or prepare where you’re staying, like protein bars or sandwiches. Those should cover your first two meals of the day. Then splurge on evening fare with local cuisine at an interesting restaurant!

Seeing the world doesn’t have to break the bank. Use these tips to plan your adventure, send me a postcard, and let me know if they make a difference for your budget!

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